Brussels Post

United in Diversity
Wednesday, Jul 09, 2025

Eurozone Growth Projections Diminish Amidst Uncertainty

Eurogroup President notes economic expansion expectations fall below 1 percent
Brussels – The Eurozone's economic growth is showing signs of slowing.

Eurogroup President Paschal Donohoe acknowledged at the conclusion of the recent euro area economic ministers' meeting that growth is now expected to fall below previously anticipated levels.

He attributed this slowdown to an 'uncertain and unclear environment,' highlighting risks associated with tariffs and security concerns.

The European Commission has already indicated that the Eurozone’s economic performance is unlikely to meet earlier forecasts, a sentiment that is now being reflected in updated growth projections.

Pierre Gramegna, Director General of the European Stability Mechanism (ESM), noted that 'markets are expecting growth of Europe to be slightly lower than predicted, probably slightly below 1 percent.' The forecast further suggests that the Eurozone could face stagnation, with predictions for 'zero-point' growth by 2025.

In light of these developments, Brussels is urging member states to accelerate economic reforms to mitigate the impact of lower growth.

Donohoe emphasized the importance of proactive measures, stating, 'Economic growth depends on us.' He also linked these concerns to the need for enhanced defense investments.

Economy Commissioner Valdis Dombrovskis clarified that the proposed flexibility in defense spending is not solely a reaction to negative growth prospects but is also driven by security considerations.

Dombrovskis further asserted that strengthening the European defense industry is among the goals of the current European policy agenda, which could potentially stimulate growth in the Eurozone economies.

The proposal to amend the internal stability pact rules is seen as a measure that could foster a new type of growth to counterbalance declines in traditional economic sectors.

Despite these measures, Dombrovskis acknowledged the ongoing risks, particularly the potential for a trade conflict, reiterating that 'the EU will react promptly and decisively to US tariffs' should the current U.S. administration proceed with its intentions regarding trade policy.
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